Got Volatility? Create a Communication Plan to Calm Nervous Investors

When the markets drop, investors get nervous and are likely to turn to their financial advisor for guidance. To be prepared for these instances, asset management firms need a communication strategy that helps to calm your separately managed account clients, as well as help financial advisors ease their clients’ anxiety. Having such a plan in place will help you keep your clients longer.

Asset managers are definitely sensing investor anxiety. They are fielding calls from advisors looking for color on why the fund is down, but more importantly, is the fund doing what it’s supposed to do. These calls have picked up considerably this year due to the high speed market action.

When talking to clients and advisors, here are some things you should keep in mind:

·        Stick to your messages: your messages need to be consistent, emphasizing the core tenets of your business and portfolio process, despite the unpredictable state of the market.

·        Offer options: there’s a lot of emotion that comes from investors at times like this. If you run a growth-oriented portfolio, not every investor can tough it out during high volatility. If you try to coerce them to stay with a product that makes them nervous, they will feel trapped. It’s better to say, “We don’t recommend exiting the product we placed you in, but if you’re at the end of your rope, it can be done.” This gives them ownership of the situation, often minimizing the level of emotion.

·        Present opportunities: express that active management typically yields the highest quality holdings and allows portfolio selection to be opportunistic, separating fundamentals from the hysteria.

·        Historical perspective: remind investors that volatility has happened before, and it will happen again. Talk about your focus on specific companies rather than what’s going on in China. You can also remind clients why market timing is a risky and difficult practice.

But don’t just wait for clients to call you—it’s very important to be proactive. Offering to host conference calls for clients, advisory firms, or consultants is usually very well received. Make sure your clients get to hear from your portfolio managers. You can even take these conference call ideas and turn them into educational content for your advisors to share with clients.

There are many tools you can employ to communicate with clients and advisors:

·        E-mails: regular e-mail communication lets your shareholders know your perspective on the most current market trends.

·        Webinars: these are a great way to speak to a large faction of clients and shareholders at once to address questions they may have.

·        Podcasts: doing a daily or weekly podcast sharing your thoughts on the market is a great way to reach clients on your website.

·        White papers and commentaries: a well-written paper is a great way to educate your audience. Keep in mind the exceedingly long papers/commentaries can be a turn-off, so remember brevity is your friend. You can easily snatch some talking points for your sales staff from these materials, too.

·        Videos: doing videos well will require some investment, but are well worth the potential return. People want to read less and watch more. Doing a Q&A with your portfolio manager is a popular way to address timely topics and performance. It also creates a way for investors to gain trust in your people.

·        Blogs and social media: be warned that blogging is time-consuming to do correctly, but is an excellent way to keep advisors engaged. These blogs can also easily be repurposed on your social media channels.

·        News media: appearing in the media bolsters your credibility and expertise. You can also repurpose these appearances through the aforementioned channels and tools.

While all of these are valuable strategies, during particularly sensitive times advisors aren’t necessarily looking for strict thought leadership. Many asset managers have explained that advisors are seeking empathy and acknowledgement of the concerns they have. Clients want to know their managers understand their situation and can do more than insist, “this too shall pass.”

Producing these various pieces of content is no small feat. Many firms reiterate the need for internal infrastructure to make all of these moving parts happen in a timely and thoughtful fashion. You are unlikely to be discovered through good performance alone—you should get your views and achievements out to your audience in a proactive, regimented manner, and a dedicated internal staff to this process is critical.

The bottom line remains that in times of market turmoil, investors are scared and they need to hear from you. If they get a good piece of advice that ends up being correct, they’ll never forget you. There are many ways to reach them, and it’s important to be proactive in your efforts. Have your talking points planned in advance, rather than fumbling when you get your first panicked call. Tumultuous markets can leave emotional scars on investors—it’s your duty to be there for them as a calming influence and guide to navigate a hysterical media.

Read our latest report Communicating During Volatile Markets: Alleviating Investor Anxiety for more ways to attract and retain clients. Dan Sondhelm is partner and senior vice president with SunStar Strategic, a marketing firm that helps grow asset managers.